“Pendling on cryptos: trading trading between peers and how to avoid a high risk route with gas costs”
The cryptocurrency world has exploded in recent years, offering investors an unprecedented level of flexibility and potential yields. However, as the market continues to grow, the same is true for the risks associated with investment in digital assets.
For those who are new in cryptographic space, trading between peers (P2PT) can be an intimidating concept. But what is it? In simple terms, P2PT allows individuals to buy and sell cryptocurrencies on online exchanges, bypassing traditional brokerage houses and payment processors. It looks like a great idea, right?
But beware: trading P2PT has significant risks, in particular:
* Liquidity risk
: prices can fluctuate quickly, leaving investors a margin call when the market accumulates against them.
* Volatility of the market
: The prices of cryptocurrencies are known for their wild oscillations, which makes it difficult to forecast future price movements.
* Exchange costs : Many P2PT exchanges charge high transaction costs, ranging from 1% to 5% of the commercial amount.
One of the most important risks associated with trading P2PT is feared gas costs. Like cryptocurrencies like Bitcoin and Ethereum are transferred to an algorithm of proof of participation (POS), transactions processing times have increased considerably. This means that buyers are now paying more for their transactions, which causes higher costs.
To avoid these traps, it is essential to understand how gas costs work. Here is a ventilation of the costs you could incur:
* Gas costs by block : Each bitcoin block is treated by nodes on the network, and each node contributes part of its treatment power to validate the transactions. The total quantity of “gas” used to treat all transactions in a block can vary from 1 to 10 mega -typles (MB) or even gigabytes (GB).
* Gas costs by byte : To put this in perspective, consider that a typical Bitcoin transaction uses approximately 50 bytes of data.
* Transaction speed : As mentioned above, transactions processing deadlines have increased considerably since the POS. This means that it can take several minutes for transactions to be checked and included in the blockchain.
So how can you avoid these risks? Here are some tips:
- Choose a deemed exchange : Select an exchange that has integrated gas costs or offers a low weight model.
- Use a P2PT broker with good liquidity : although it may seem countertop to use a traditional brokerage house for P2PT trading, using a can help maintain liquidity and reduce the risk of market volatility.
- Consider a centralized exchange (CEX) : CEX generally have lower costs than P2PT exchanges, but are often less transparent on their gas costs.
- Keep an eye on your portfolio : Regularly examine the history of your transaction to identify potential problems with gas costs or liquidity.
In conclusion, although the negotiation and gas costs between peers can be intimidating, it is essential to understand the risks and take measures to mitigate them. By choosing a deemed exchange, using a P2PT broker with good liquidity and being aware of gas costs, you can minimize your exposure to market volatility and transactions processing times.
While the landscape of cryptography continues to evolve, it is crucial to prioritize prudence and prudence during investment in digital assets. With good mentality and good strategy, you can successfully navigate the complex world of cryptocurrency trading.
